Copper Rises to Record, Set for Monthly Gain, on Supply Outlook
2005-11-30 06:53 (New York)
By Simon Casey
Nov. 30 (Bloomberg) -- Copper headed for its sixth
consecutive monthly gain, trading at a record in London, amid
forecasts demand will outpace production. Aluminum and zinc also
traded at multi-year highs.
The shortfall in copper production this year will be
343,000 metric tons, Standard Bank in London said in a report
yesterday. Users of the metal such as wire and pipe makers are
turning to stockpiles to fill the deficit. Inventory tracked by
commodity exchanges in London, New York and Shanghai are 149,393
metric tons, according to data compiled by Bloomberg, about
three days' global usage.
``The fundamentals still support this market,'' Jeremy
Goldwyn, global head of industrial commodities at Sucden (U.K.)
Plc, one of the 11 companies trading on the floor of the London
Metal Exchange, said in an interview. ``We remain mildly
bullish.''
Copper for delivery in three months on the London Metal
Exchange rose $2, or 0.1 percent, to $4,234 a metric ton as of
11:15 a.m. local time. Earlier, it traded at $4,267, beating
yesterday's record by $10. The metal has gained 8.2 percent this
month and 35 percent since the start of the year.
Investment funds are increasing metal purchases at the
expense of other securities such as stocks. Funds tracking
commodity indexes will double in value to $140 billion in the
next four years, Benno Meier, vice president of investor product
sales at Morgan Stanley, said at a London conference yesterday.
Investment `Flood'
The Goldman Sachs Commodity Index, which tracks a range of
commodities including base metals, has risen 31 percent this
year. The S&P 500 Index of U.S. stocks has gained 3.8 percent.
``The current flood of money into metals shows no signs of
abating,'' William Adams, an analyst at U.K. metals information
Web site Basemetals.com, wrote in a report today.
Metal prices on the LME rose yesterday after a government
report in the U.S., the world's No. 2 copper consumer, showed
durable-goods orders gained 3.4 percent. Economists forecast a
1.5 percent increase, based on the median of 61 estimates in a
Bloomberg survey.
U.S. new home sales increased to a record last month.
Purchases grew 13 percent, the biggest gain since April 1993, to
a 1.424 million annual rate from 1.26 million in September, the
Commerce Department said.
Mine Shortfall
``Stronger-than-expected data on U.S. homes sales and
durable goods gave the metals a boost,'' said David Thurtell, an
analyst in Sydney at Commonwealth Bank of Australia, in a report
today.
Freeport-McMoRan Copper & Gold Inc. said yesterday fourth-
quarter production from its Grasberg copper mine in Indonesia,
the world's second largest, is ``slightly short'' of target
because of lower-grade ores. Copper output is 5 percent below a
target of 480 million pounds, the Baton Rouge, Louisiana-based
company said.
Copper production shortfalls may prolong the market's
supply deficit. Demand beat supply from mines and refineries in
the first eight months of 2005 by 114,000 tons, the Lisbon-based
International Copper Study Group said yesterday.
China may double sales of copper to $400 million to damp
record prices and cover losing bets by government trader Liu
Qibing. The State Reserve Bureau in Beijing may sell 40,000 to
60,000 tons of copper from its inventories at auctions in coming
weeks, according to traders including Yang Yinghui, head of the
futures-trading department of Cofco Futures Co. in Beijng.
That's about double the 47,500 tons it has sold so far this
month.
Trading Losses
The SRB is selling metal to cover trades by Liu involving
about 130,000 tons of copper, the state-run China Daily said
Nov. 24. The bureau has settled some bets in cash and metal, and
rolled others over into next year, said Yuan Fang from Shanghai
Dongya Futures Co. The government may lose as much as $300
million from the trades, according to Wang Zheng, from Shanghai
Dalu Futures Co.
Liu, who worked at the State Regulation Center of Supplies
Reserve in Beijing, agreed to sell copper he didn't own on the
LME, betting a drop in prices would let him buy it back more
cheaply. Instead, prices rose.
The China Daily said Nov. 17 the losses were a result of
his personal actions, not those of the government.
Aluminum, which is used to make beverage cans and cars,
rose $13, or 0.6 percent, to $2,134 a ton. Earlier, it traded at
$2,140, a 10-year high.
Zinc advanced $7 to $1,707 a ton and traded as high as
$1,717, exceeding yesterday's 15-year high by $12.
Lead increased $6 to $1,027, after earlier trading at a
record $1,030, $2 above yesterday's all-time high. Nickel
dropped $375 to $12,650 and tin fell $40 to $6,085.
--With reporting by Xiao Yu in Beijing, Helen Yuan in Shanghai,
Paul George and Saijel Kishan in London, and Damien Ryan in Hong
Kong. Editor: Carrigan. |
